We're selling our family home for £450,000: Should we rent and invest the windfall?

My husband and I have finally accepted an offer on our house, having spent months on the market and reduced our asking price twice.

We’re in our fifties, and both our children are in their twenties and have moved out. Our home is mortgage-free so we will get a £450,000 windfall when we sell.

We initially planned to put the £450,000 into our next home, but our selling experience has put us off.

We've realised we can rent the same type of house in our area for £1,000 a month. A quick calculation tells us it will take 37.5 years until that rent totals £450,000.

House prices where we are have barely moved over the past decade, while the value of our invested pensions and Isas have basically doubled.

Would we be better off renting, and drip feeding the cash from our sale into Isas and pensions - and perhaps also gilts? What's the best strategy for this? We'd also like to use some cash to help our children get on the ladder.

We are both still working but my wife is part-time.

Ed Magnus of This is Money replies: This is a really interesting question.

The default choice for most Britons is to own their own home if they can afford to do so, but there is a case to be made for renting.

Buying a home comes with substantial costs such as stamp duty, legal fees and surveys.

On a £450,000 purchase, a typical home mover will face a stamp duty bill of £12,500 - that's more than you'd pay for your entire first year of renting.

There can also be a lot of anguish involved with buying and selling a home, with Santander revealing recently that failed property transactions cost movers £560million every year.

It revealed some 23 per cent have experienced a property chain fail, which is putting them off moving and is stifling the housing market.

If it's a choice between buying a property for £450,000 or renting something similar for £10,000 a year, there may well be a financial argument for renting - but only if the proceeds of your sale are put to productive use.

There is also a strong argument to rent on a short-term basis if you are not yet sure of what you want.

You might find it suits you perfectly and decide to stay - but you always have the money in your pocket to get back on the ladder if it doesn't work out.

One fear that people have when renting temporarily is the possibility of house prices suddenly booming, meaning the money from their sale is no longer enough for the home they want.

You shouldn't worry too much, though, as the market is hardly moving at a rate of knots.

In many parts of the country, average house prices are exactly the same as they were three years ago.

Renting does have its pitfalls, though. You won't feel as secure, given the landlord can ask you to leave with just two months' notice - though the Renters' Rights Bill should bolster protections for tenants from 2026.

Something else to consider is the strong chance that your rent would increase from that initial £1,000.

Over the past five years, average rents have risen by 33.6 per cent, according to Office for National Statistics data. If the same increases play out over the next five years, you could find your monthly rent has risen to between £1,300 and £1,400 by 2030.

There is also a middle ground, in that you could buy the next property using a small mortgage and keep some cash from the sale to either invest or give to your children.

For expert advice, we spoke to Rob Dix, co-founder of property advice website Property Hub, Faye Church, senior financial planning director at wealth manager Rathbones, Alice Haine, personal finance analyst at investing platform, Bestinvest by Evelyn Partners.

Rob Dix replies: Many people have a knee-jerk reaction against renting, especially later in life, when actually it can be a perfectly reasonable option if you have money invested elsewhere.

Looking at the numbers, you would need at least a 2.7 per cent return on your £450,000 to cover your rent – which should be achievable even with extremely low-risk investments. That is based on the rent not increasing, however.

Renting also offers flexibility. If you choose to move to another part of the country or abroad to be near family - or if you need to move into specialist accommodation later in life - you can do so without the hassle and costs of selling a property.

I choose to rent for the flexibility, and would do so even if it were financially the worse move - but many people would have exactly the opposite view.

Alice Haine adds: There can certainly be some advantages to renting over home ownership.

Any maintenance issues with the property are the landlord's problem, not the tenant's, so you can live in a property without the hassle of worrying about boiler servicing, fixing leaking roofs or mending broken appliances.

Faye Church adds: There can be some advantages to renting - the freedom and flexibility of not tying up cash in property for a start.

Not only are you in a position to invest and try to get a better return on your money, it gives you the flexibility to gift some of this money to children or grandchildren to help them get on the property ladder at some point in the future. This is something you may not be in a position to do if most of your wealth is tied up in your own property.

Alice Haine replies: I urge a note of caution on the current rent you have seen. Yes £1,000 a month, at today’s typical rental rates for your chosen property, would take 37.5 years to amount to £450,000 – the amount you would spend on a property.

However, this comparison overlooks the reality of rent inflation.

Rents have risen sharply in recent years. Average UK private rents rose by 5.9 per cent to £1,343 per month in the year to July 2025, according to the ONS, with some regions hit even harder.

Annual rent inflation in the north of England reached 8.9 per cent over the same period.

At the same time, the exodus of private landlords, driven by higher taxes and increased regulation, has slashed rental supply, limiting options for tenants and pushing up prices even further.

Factor in this inflationary pressure and it’s likely that you will hit your expected £450,000 rental outlay much faster than anticipated.

There’s also the issue of security and stability. Finding a property with a reliable landlord who handles repairs promptly isn’t guaranteed and securing a long-term rental in retirement can also be a challenge.

Even committed landlords may be forced to sell up and while relocating in your 50s is manageable, doing so in your 80s and 90s is far more difficult.

Older renters may also face health challenges and require home adaptions, such as a chair lift, which not all landlords will permit.

Renting offers flexibility, but it is important to consider the long-term financial implications, especially once you hit retirement age.

Pension incomes are typically fixed and stability, affordability and the ability to adapt a living space to changing needs become increasingly important with age.

Faye Church adds: The biggest downside to not owning your own property is handing over control to your landlord.

Rent increases and the potential threat of having to leave if the property is sold can bring uncertainty.

There is also the issue of tax. Your main residence increases in value tax-free, whereas alternative investments would need to be structured using Isa allowances and other tax advantaged products to produce tax-free returns.

Rob Dix adds: Rents will go up, whereas if you bought a house your costs would be largely fixed.

You also don't have security. Many people don't like the idea, especially later in life, of potentially having to move with a couple of months' notice if a landlord decides to sell or move back in.

Also, thinking ahead to inheritance tax, it would likely maximise your tax-free allowance if you had a primary residence as part of your estate.

Alice Haine replies: While investing the money saved from not buying a home could dramatically enhance retirement savings, there is also the risk that those investments fail to deliver the hoped-for returns.

The danger is that the couple reaches later life without a home of their own and limited financial reserves at a time when they are most vulnerable and may require care and support.

Faye Church replies: A balanced portfolio based on your appetite to risk, which may well include gilts to give a tax efficient growth and income outside of an Isa, could provide an investment return above that of your property, although, crucially, this is not guaranteed.

Maximising your pension contributions whilst working and taking advantage of tax relief is also a good option, which can be managed in a similar way.

Alice Haine replies: For those hoping to pass wealth on to their children, a property often represents the final piece of capital, either to fund later life care or leave as an inheritance.

Without that asset, their ability to support future generations or cover end-of-life costs may be hampered.

If it does come to the point where a property is your main asset and you need funds, there is always the possibility of equity release, although this can come with its own issues.

Keep an eye on interest costs and other charges and be aware of the impact it will have on your estate at death.

Rob Dix replies: My advice would be to weigh the psychological factors above the financial ones, and don’t let social pressure influence your decision. There's nothing inherently wrong with renting if it fits your circumstances and preferences.

And of course, you can always change your mind later. If you want to rent for a while to see how it feels or until the perfect home comes along, you’re not 'throwing money away' and we’re not at a point in the market where prices are going to run away from you.

Faye Church replies: Do give serious thought to the home you want to live in and where it is, which may impact the respective arguments of renting versus buying.

None of this is simple and a misstep could undo decades of planning and impact your retirement ambitions.

As such, seeking advice from a Financial Planner to discuss and help structure your needs, and an investment manager to put together an investment strategy would help you to have a better understanding of your options both now and in the future.

If you have any property-related conundrums you'd like help answering, email [email protected]

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